DAVOS, Switzerland (REUTERS) - German Chancellor Angela Merkel warned on Thursday against easing off on painful reforms in Europe, saying the bloc must ensure it took full advantage of its debt crisis to modernise and boost its competitiveness.

"The political experience is that often you need pressure for political structural reforms," Dr Merkel said during a keynote speech at the World Economic Forum (WEF) in Davos.

"My conclusion is therefore that if Europe is in a difficult situation today, we must implement the structural reforms today so we can live better tomorrow."